Malaysian palm oil slides for 3rd-straight day on crude oil slide

Malaysian palm oil slides for 3rd-straight day on crude oil slide

KUALA LUMPUR: Malaysian palm oil futures fell for a third day on Tuesday and slide to their weakest in nearly two weeks, as crude deepened its sharp drop and volatility in emerging Asian markets turned investors wary.

Brent crude fell as low as $59.02, its weakest level since May 2009, while U.S. crude was down $1.60 at $54.31 a barrel, extending a 6-month selloff as slowing Chinese factory activity and weakening emerging-market currencies added to concerns about demand.

Traders said while the palm market has been supported over the past weeks on hopes that weakening production will help shrink inventories, this week’s turmoil across equity markets and steep losses in crude could trigger more selling.

“The macro economic factors are taking the lead to slowly push palm prices lower, and they will bring prices further down in the coming days,” said Chandran S.,a trader at LT International Futures.

“The bearish sentiment in worldwide equities and falling crude oil is really going to have a negative impact on commodities. Palm and soybean oil cannot escape,” he added.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange fell to a Dec. 3 low of 2,114 ringgit in afternoon trade, before settling down 2.4 percent at 2,120 ringgit ($608) per tonne by Tuesday’s close.

Total traded volume stood at 52,441 lots of 25 tonnes, above the usual 35,000 lots. The plunge in oil and the failure of an emergency interest rate hike to stabilise Russia’s rouble sent another shock through global financial markets on
Tuesday.

Palm, the world’s most traded vegetable oil, also faced pressure from comparative soyoil markets.

The most active May soybean oil contract on the Dalian Commodity Exchange lost 1.43 percent in late Asian trade, while the U.S. soyoil contract for January shed 1.1 percent.Optimism that the ringgit-priced palm feedstock might attract buying interest, however, provided some support.

“The one thing that may neutralize all this is that the weak ringgit and weak palm oil prices may encourage exports,” said a trader with a foreign commodities brokerage in Kuala Lumpur.

Cargo surveyor data show that Malaysian exports of palm oil products picked up to around 615,000-618,000 tonnes in the first half of December, around 2-3 percent higher than the same period in November, as demand from Europe nearly doubled.

Malaysia will also extend its export tax exemption on crude palm oil to January, a circular from the Malaysian customs department showed on Tuesday. The No.2 grower had scrapped the tax from September to encourage overseas sales and cushion the fall in prices that have lost 20 percent this year. 

Palm, soy and crude oil prices at 1049 GMT                         

ContractMonthLastChangeLowHighVolume
MY PALM OIL      JAN5    2112  -39.00    2104    2133    735
MY PALM OIL      FEB5    2119  -48.00    2112    2150  11072
MY PALM OIL      MAR5    2120  -50.00    2114    2151  22265
CHINA PALM OLEINMAY5    4952  -64.00    4948    5038  831622
CHINA SOYOIL    MAY5    5624  -74.00    5612    5680  372122
CBOT SOY OIL    JAN5  31.91    -6.10  31.82  32.30    6640
INDIA PALM OIL  DEC4  415.60    -6.10  415.00  420.90    865
INDIA SOYOIL    DEC4  581.20    -0.55  580.10  583.00    1880
NYMEX CRUDE      JAN5  54.40    -1.51  54.01  55.85  46597

  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel

($1 = 3.487 Malaysian ringgit)
($1 = 6.1903 Chinese yuan)
($1 = 63.41 Indian rupee)- Reuters

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